Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (418)	1/25/1998 10:44:00 AM
From: Rob Preuss	Read Replies (3) \| Respond to of 1250

Well, isn't the long term growth rate simply a reflection of those future earnings? In effect, if one is estimating the growth in future earnings and believes there is a risk of accidents then one takes that into account by reducing the estimate of long term growth. IBES reports that analysts estimate long term growth of 27.5% for ACT. The company (in their Q3 conference call) estimated 30% growth.[1] According to Frost & Sullivan the industry should do 26.1% overall.[2] [1] No. Greenlaw didn't state anything about long term growth rate in my recent conversation with him. [2] As I recall, this number was posted elsewhere on SI. So I picked 28% long term growth and figure that it already reflects any increased risk of accidents. But Rich (and you?) want to reduce this to 18% !!! I see that as way too pessimistic. Long term means like a 5 year outlook; they had a surprise bad quarter (which coincided with all the global market problems) so the stock tanked; folks are waiting to see that there won't be a string of surprises... and so the stock is priced below its intrinsic value of about $36/sh. When a few more quarterly results come in and meet the earnings expectations (and global market worries subside), investor confidence in ACT will return and the price will realign itself with the intrinsic value. Sure, its possible that the analysts have it wrong and there could be more bad quarters lurking out there. If so, then the long term growth and the intrinsic value is much lower than $36/sh we currently estimate. But right now I have no evidence/information to support that idea. Two other notes: + You stated that "they absolutely know the results for Q4". This is not true. Greenlaw stated they were still working the numbers. I think it is unlikely that any surprises are still lurking in the numbers at this late date but unlikely doesn't mean impossible. + I agree with Paulo. When this comes back it may do so fast. I bought in too early but I'd rather do that than miss the rising price when it returns. The window of opportunity is still open but its hard to know when it will shut.